- The Australian dollar has gone back and forth during the trading session on Tuesday as we continue to look for some type of directionality.
- All things being equal though, I do think that the Aussie dollar looks a bit heavy at this point, and it would make a certain amount of sense to see this market break apart.
- If we break below the low of the Friday candlestick, then I see an argument for this market dropping to the 0.63 level before it is all said and done.
The market currently sits on top of the 200 Day EMA, but just below the 50 Day EMA, and that means that we are in a scenario where traders are probably trying to sort things out.
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Aussie Underperforms
The Australian dollar has underperformed for months, right along with its cousin, the New Zealand dollar. I believe this is because of the concerns about the global trade situation. After all, if there is a continuation of the tariffs and the potential trade war between the United States and several other large economies, this will destroy commodity markets which of course have a major influence on the Australian economy itself. In other words, Australia is hanging on by a thread and they don’t even control their own fate.
Because of this, I am extraordinarily bearish on the Australian dollar, and even if it does rally, I anticipate that it won’t rally as much as other currencies against the US dollar, just like we have seen over the last year or so. With that being the case, I don’t have any interest in trying to buy this currency, but if I were to short the US dollar, I would probably do it with a stronger currency. A rally from here that breaks above the 50 Day EMA could open up the door to the 0.6550 level, possibly even 0.66, where I would expect to see the selling process begin yet again.
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